Debt collectors can bombard you with texts and emails under new rules

Debt collectors could soon get an all-clear to text, email and private-message consumers who have fallen behind in debt repayments — on an unlimited basis.

The change is part of a proposed rule from the Consumer Financial Protection Bureau, which is seeking to update the Fair Debt Collection Practices Act. Passed in 1977, consumer advocates and debt collectors alike say the law is far overdue for an update, given that faxes and phone-answering machines were cutting-edge technology at the time.

Yet the proposed law, released on Tuesday, may raise concerns for consumers and privacy advocates, given that the update would allow debt collectors to bombard consumers with texts, emails and even private messages on social media services such as Twitter. Debt collectors say they need to access consumers through these communication methods because more people are shunning phones, especially millennials and younger consumers.

It’s not clear that consumers will welcome the changes, given that debt collectors are already one of the most complained-about financial players to the CFPB. In 2017, the agency recorded 84,500 complaints about the debt-collection industry. About one out of five complaints are linked to “communication tactics” of debt collectors, the CFPB found in a 2018 report.

Opting out

Consumers will have some options for cutting off excessive texts or emails, however. The rule would allow consumers to tell a debt collector to stop contacting them at a particular email address or text number, for instance.

The proposed law would also limit the number of phone calls from a debt collector to 7 per week. That limit is already being decried by the debt-collection industry, which called it an “arbitrary” number.

“We think there are several areas that need to be clarified and improved upon before the rule is finalized, including the arbitrary limit on call attempts that could unnecessarily impede communications with consumers,” Mark Neeb, the CEO of the Association of Credit and Collection Professionals, the trade group for the debt collection industry, said in an emailed statement.

Debt-collection agencies

There’s a lot of money riding on the new rules, as debt collection is now a $10.9 billion industry that employs almost 120,000 workers at debt-collection agencies and other companies. Since the financial crisis, American consumers have taken on more debt, with some delinquencies, such as for auto loans, steadily increasing despite unemployment shrinking the past decade.

The proposed rule may add fuel to critics’ concerns that the CFPB has lost its appetite for going after financial abuses by corporations under Trump administration appointees. Its current director, Kathy Kraninger, has signaled the bureau will take a more business-friendly approach under her leadership.